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Town Eyes Future Of Conveyance Tax

December 22, 2010 by Josh Morgan

If the real estate conveyance tax reverts back to its old form this summer, the Town of Cheshire could stand to lose as much as $250,000 annually as a result.
Years ago, the conveyance tax was increased an extra $1.40 per $1,000 of real estate value. The legislation was enacted in 2003 to help municipalities when state aid was dramatically cut. The current value of $2.50 per $1,000 benefits the Town whenever a property is sold. Each year, the legislature has to act to extend the current values or else it expires, or sunsets, reverting back to its pre-2003 value. According to Town Manager Michael Milone, the conveyance tax brings in as much as $390,000. However, in this admittedly poor economic climate, Milone said the impact was closer to $250,000.
"We've been fighting this battle for seven years," Milone said. "The sunset could mean a big difference."
As such, the Town is including a request to the legislature to keep the conveyance tax at its current levels. This request was one of six that Milone, with the unanimous approval of the Town Council, will send to Cheshire's elected state delegation in the next few weeks. The list is generally more expansive, but with the state's financial troubles, Milone pared the list down to include items that would have little to no budgetary impact. However, there was one exception in his list.
A $30 million project waits on the horizon in the form of upgrades to the Wastewater Treatment Plant, which will also include a special phosphorus removal process, per a request from the Department of Environmental Protection. Cheshire is one of six communities in the state mandated to include phosphorus removal because discharge from the plant eventually leads to Long Island Sound.
As such, the cost for the upgrades have increased and the Town feels the state should pick up some more of the tab. Currently, through the Clean Water Fund, grants are available to communities in 20/80 form, meaning a 20 percent grant and 80 percent loan, which is paid back at a low interest rate. The Town wants to see the split be 30/70 for itself and the other communities dealing with phosphorus removal in the future.
"We'd like to be reimbursed at the higher level," Milone stated.
Furthermore, the Town is asking for a correction to some language in the state's defense enterprise zones. An error was noticed by staff and will be forwarded along to the legislature. These zones provide for tax abatement and tax credits. The Pratt & Whitney facility located on Knotter Drive is in a defense enterprise zone and Town officials want to be assured that, once the company closes the plant, a new company could take advantage of these benefits.
"It's just a minor change to the language," Milone explained.
The Town also wants the state to modify its binding arbitration laws in two different ways. Milone explained that the hope is for local legislative bodies to have the authority to reject arbitration awards by a two-thirds vote. In this case, the contract would be renegotiated.
Currently, if the Town rejects an arbitrated contract, it is sent to a second, and final, binding arbitration panel. The state can negotiate again, whereas the cities and towns are forced into binding arbitration, Milone said.
"We want parity with the state in regards to binding arbitration," he stated.
Additionally, the Town is hoping that municipal fund balances, or rainy day funds, could not be held against it when it comes to contract negotiations. Now, an arbitrator can view these contingency funds as an ability to pay for a contract.
"They use the fund balance against us. They think we can pay it," Milone said. "Our fund balance stands out because no one else funds theirs."

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